K&N Kenanga Research has maintained an “Outperform” call for Dialog Group Bhd with an unchanged Sop-TP of RM3.50 (implying 31x forward PER). No changes to our FY22E/FY23E numbers post-results.
The research house said that despite some rebound in its share price recently, the stock is still trading at roughly 1.5SD below its mean valuations.
It said that it feels these levels have yet to adequately price in its growth prospects from Pengerang, especially with most of its long-term outlook remaining intact.
Despite near-term challenges amidst the lockdowns, DIALOG’s long-term outlook and earnings resiliency from its midstream assets remain largely intact.
Petronas’ RAPID facilities are expected to commence in the coming months, and we believe this will help improve prospects for its Pengerang Phase 3, with the group still sitting on 500 acres of Pengerang land ready for future expansions.
Going into FY22, K&N Kenanga said that the Pengerang Phase 3A will see full-year earnings contribution, while the expansion of its Langsat Terminal facility by a further 85k cubic meters (from 770k currently) is expected to be completed by mid-FY22.
It said that it believes these, coupled with an expected recovery in downstream activities, should provide the group with ample growth opportunities in the coming 1-2 years.